The Characteristics of Quality Investment Companies

A key element of any investment philosophy is to invest in ‘quality’ companies. We believe quality companies deliver higher returns at a lower level of risk than low quality companies. The issue with the term ‘quality’ is defining what exactly is a quality company and what it’s not. Quality is a subjective measure and what may look like quality to one person is not to another. It is also difficult to measure and value. Unfortunately we cannot simply insert a line into a company’s balance sheet called ‘quality’ and attach an appropriate dollar figure.

Here are some key indicators of quality companies:

1. Track record of steady growth in earnings per share (EPS)
A quality company should be growing its earnings over time. It is important to look at EPS rather than just profits because profits can be inflated by issuance of additional equity and acquisitions. EPS is the best measure of real earnings growth.

2. Track record of steady growth in dividends per share
Nothing is more transparent than dividends. The payment of a dividend proves that a company has cash on hand and the financial muscle to produce a cash flow to shareholders. Dividend growth is the key to long-term share price performance

3. Strong balance sheet
It is a simple, but little considered, fact that companies with no debt do not go bankrupt. Some companies that have defensive businesses and high cash flows can tolerate higher levels of debt, but always look for rock solid finances, of which having a manageable level of debt is a key attribute.

4. Strong market position and pricing power
For share investors, competition is the enemy. Prefer companies that have the mettle on their competition either because they have an unrivalled brand, distribution network or product, or look for companies that face low levels of competition, like many utilities. Excessive competition puts pressure on margins and undermines profitability. Look for companies that have high levels of pricing power. Having the ability to increase prices is indicative of a company with a strong market position. Utilities sometimes have this pricing power controlled by regulation.

5. Inherently defensive business
Companies with businesses that are defensive are generally higher quality companies. Defensive businesses are those that provide goods and services for which there is a reliable and growing demand. Companies that provide these sort of ‘core’ services include, banks, utilities, oil companies, healthcare companies, and producers of food and personal hygiene products.

6. Strong management
The experience, vision, leadership skills and integrity of management can have a huge impact on the performance of a company.

Start Up Financing For Small Businesses – Getting the Money You Need to Get Started!

When it comes to your business idea it is important that you know you have a lot of things you can do in order to get yourself set up and open. You need to know how to find start up financing for small businesses and you need to know what it is going to take in order to get what you need. There are options out there and it might take a combination of options.

The first thing you can do, of course, is go talk to your bank and see what it is going to take for you to get the money you need in order to get your business up and going. They might be able to cover all the money you need or just a portion. Regardless, you need to find out what your bank can do for you because they are going to be one of the most forgiving lenders and helpful lenders for you.

Another way to get start up financing for small businesses is to use private investment groups. These are usually called angel investors and they are out there. Many of the different groups that might be willing to invest in you and your business may be willing to give you all the money you need because they are looking to invest larger sums of money anyway.

Regardless of where you get your financing you are going to need to be able to cover a portion of what you need yourself. This is very important to know because you will have to have some cash of your own or there is a good chance that nobody else will be willing to help you with financing.

Investment Banking For Mergers and Acquisitions

The field of investment banking has changed faces drastically over the years. Initially the functions of banks and banking institutions with regard to this type of banking was clear cut but today, there is a blurry line between investment banking and other forms of banking. However investment banking has taken a dominant role in the financial, business and banking industry due to the fact that more and more businesses are seeking to undergo mergers and acquisitions to increase the their net worth. Today banks are not the only institutions that are engaged in these functions, private equity and venture capital firms are largely concerned with these tasks as well.

Under the corporate finance functions of an investment banking firm, clients are advised on how to raise funds if they want to engage in a merger or an acquisitions. For private equity investors and venture capitalists the advice they get from those who are concerned with this type of banking enables them to make the right decisions. Corporate finance is a function that has notably flourished over the years and has caused investment banking to become one of the most fundamental drivers of the money-market. The large multinational companies as well as the medium scale companies that are seeking funding for acquisitions can do so through making their company stocks public, that is making an initial public offering or they can seek the help of an investment banking institution in the trading of their shares in the stock market.

An important function of investment firm when it comes to mergers and acquisitions is the market analysis that these firms undertake for their clients. The procedures that are involved in mergers and acquisitions are largely dependent on market factors and complex dynamics in the money market; companies thus get invaluable advice on the suitable time to make their move in either merging with another company or acquiring another entity that they are interest in.